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Headshot of Jeffrey Simpson. (Brigitte Bouvier/Brigitte Bouvier/For The Globe and Mail)
Headshot of Jeffrey Simpson. (Brigitte Bouvier/Brigitte Bouvier/For The Globe and Mail)

Jeffrey Simpson

New Brunswick and its pipeline dream Add to ...

New Brunswick governments have suffered from oil and gas envy. A bit grumpily, they watched offshore oil pour revenues into Newfoundland and saw Nova Scotia reap the benefits of offshore natural gas.

Times are tough in New Brunswick, which makes the envy a bit deeper. The province has suffered two credit downgrades. It’s running a large fiscal deficit and has a big debt burden. Unemployment remains stubbornly high; Harper government changes to EI eligibility for seasonal workers are unpopular. Lots of workers have headed to Alberta to work in the oil and gas industry.

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Could it be, however, that oil and natural gas might lift New Brunswick itself from its economic doldrums, at least partially? Not for a while. But perhaps in a decade, or a bit sooner, oil and gas may be running through the province to Saint John, bringing jobs, revenues and even spinoff industries to a province that needs them all.

Here’s the dream scenario: Alberta’s bitumen oil is being increasingly harried; pipelines through British Columbia face considerable opposition; the Keystone XL pipeline to the Gulf of Mexico is uncertain, owing to the vagaries of U.S. politics.

The one direction where western oil can flow with the fewest political obstacles is east – to Ontario (for refining in Sarnia), Quebec (Montreal and Quebec City) and Saint John, with a refinery and a deep-water port for year-round shipping.

All three major political parties in New Brunswick support a pipeline from Quebec City to Saint John. So do the Harper Conservatives, provided a business case can be made. Even the federal New Democratic Party is nominally in favour. With those ducks lined up, no wonder New Brunswickers allow themselves to dream.

But wait. Between dream and reality lies Quebec. There, “national interest” means what’s in it for Quebec.

Quebec has ripped off Newfoundland over Labrador hydro for decades, refusing to reopen any part of an egregiously unfair deal signed when hydroelectric rates were a tiny fraction of what they became. Hydro-Québec’s takeover plans for New Brunswick’s electrical utility died on the hill of ferocious local opposition in the smaller province.

No pipeline can reach New Brunswick unless Quebec agrees to allow a line from Quebec City to the border. In theory (and in law), a decision on such interprovincial matters lies with Ottawa; in practice, no federal government would dare defy Quebec.

New Brunswick’s hope is that the lure of shipping oil all the way to New Brunswick will make the Alberta industry more interested in reversing one pipeline and building another to supply the refineries in Montreal and Quebec City. More oil could then be sent to Saint John. Alberta oil would be cheaper than offshore supplies for Quebec and not subject to interruptions or price spikes as the result of international crises.

New Brunswick Premier David Alward has met with Quebec’s Pauline Marois, who promised to study the matter from the unique perspective of Quebec’s interests – and from the perspective of her cabinet and caucus dynamics, where voices inveigh against oil in general and Alberta’s “dirty” bitumen oil in particular. Mr. Alward has clear political sailing in his province. Not so Ms. Marois in her own party.

And then there’s shale gas. Four companies are working on the resource in New Brunswick. Early estimates suggest large quantities of shale gas in the province. Environmental questions must obviously be answered.

New Brunswick sits in a geographic sweet spot. A gas pipeline runs to the United States from Nova Scotia. Saint John, with its deep-water port, would be perfect for a liquefied natural gas terminal site. Shale gas for the U.S. (assuming a market exists, what with the discoveries of shale gas there). Liquefied natural gas for foreign markets. Jobs and money for New Brunswick. Maybe there could be petrochemical production, too. And just maybe, fertilizer plants using the province’s potash and shale gas.

It is all to dream. In the province that gave the world the Bricklin car, dreams have had a way of going awry. But these oil and gas dreams are not so easily mocked.

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